1 00:00:00,320 --> 00:00:03,920 Speaker 1: For the Money Show Personal Finance with Warren Ingram. 2 00:00:04,320 --> 00:00:07,720 Speaker 2: The Personal Finance feature Warren Ingram, as you know, is 3 00:00:07,760 --> 00:00:10,479 Speaker 2: the financial advisor and co founder of Galileo Capital, and 4 00:00:10,520 --> 00:00:15,280 Speaker 2: our subject tonight, Warren is the retirement lessons. You can't 5 00:00:15,560 --> 00:00:19,360 Speaker 2: afford to ignore. War In in a way, this really 6 00:00:19,480 --> 00:00:22,120 Speaker 2: encapsulates a good moment to sort of encapsulate all the 7 00:00:22,120 --> 00:00:24,239 Speaker 2: things that we've been learning about. But there's no finance 8 00:00:24,239 --> 00:00:26,480 Speaker 2: for so long, and what the point of it really is? 9 00:00:28,200 --> 00:00:31,200 Speaker 3: Absolutely right, Stephen, and I think it's a good time 10 00:00:31,200 --> 00:00:33,919 Speaker 3: to chat about it because the world is crazy right now, 11 00:00:33,960 --> 00:00:37,000 Speaker 3: and I think a lot of people are unsettled about 12 00:00:37,040 --> 00:00:40,320 Speaker 3: their investments. And for those of us that are still 13 00:00:40,400 --> 00:00:44,840 Speaker 3: working and contributing to our savings and our investments, it's 14 00:00:45,040 --> 00:00:49,600 Speaker 3: very unsettling. But for people who are retired, you know 15 00:00:49,640 --> 00:00:52,720 Speaker 3: that discontent goes up a lot because you're watching your 16 00:00:52,720 --> 00:00:55,720 Speaker 3: investments go down at a time when you need to 17 00:00:55,800 --> 00:00:57,880 Speaker 3: draw from them. So I think it's a very good 18 00:00:57,880 --> 00:00:58,760 Speaker 3: time to chat about this. 19 00:00:59,480 --> 00:01:02,840 Speaker 2: Okay, So the issue really is longevity, how long you 20 00:01:03,000 --> 00:01:07,119 Speaker 2: actually live for, and this really is about how you 21 00:01:07,160 --> 00:01:11,200 Speaker 2: make sure that when the time finally comes not to retire. 22 00:01:11,240 --> 00:01:14,640 Speaker 2: The other worst time that things are ready for that. 23 00:01:14,720 --> 00:01:17,320 Speaker 2: So this is about how much money you have and 24 00:01:17,360 --> 00:01:20,480 Speaker 2: where you are in your retirement at that point. In 25 00:01:20,520 --> 00:01:23,200 Speaker 2: other words, it's not about the first year of retirement. 26 00:01:24,640 --> 00:01:28,119 Speaker 3: No, that's absolutely right. And I think when you talk 27 00:01:28,160 --> 00:01:32,360 Speaker 3: to people and you say to someone at age fifty 28 00:01:32,440 --> 00:01:36,720 Speaker 3: or fifty five that you know, we should probably plan for, 29 00:01:36,959 --> 00:01:39,640 Speaker 3: you know, for your life to run out at somewhere 30 00:01:39,680 --> 00:01:43,039 Speaker 3: around age one hundred, usually they sort of smile at 31 00:01:43,040 --> 00:01:45,959 Speaker 3: you as if you're a little bit crazy and you know, 32 00:01:46,040 --> 00:01:49,080 Speaker 3: your heads in the clouds. But it is a reality 33 00:01:49,160 --> 00:01:51,960 Speaker 3: that there are lots of people you know, all around 34 00:01:52,000 --> 00:01:54,160 Speaker 3: the world and in South Africa that you know that 35 00:01:54,320 --> 00:01:59,120 Speaker 3: comfortably lived to their late eighties early nineties, and you know, 36 00:01:59,160 --> 00:02:02,440 Speaker 3: if you're hitting retire, I'm into sixty five and thinking, well, 37 00:02:02,480 --> 00:02:07,120 Speaker 3: I've probably got ten or fifteen years of life left. Unfortunately, 38 00:02:07,520 --> 00:02:11,480 Speaker 3: you're likely to be wrong. And the worst thing that 39 00:02:11,520 --> 00:02:13,639 Speaker 3: could happen in a situation like that is that you 40 00:02:14,320 --> 00:02:17,639 Speaker 3: spend aggressively in the early part of your retirement and 41 00:02:18,480 --> 00:02:21,000 Speaker 3: you know, not worry too much about later in life, 42 00:02:21,040 --> 00:02:24,080 Speaker 3: and then you know your money runs out, you know, 43 00:02:24,120 --> 00:02:26,120 Speaker 3: at a time when you can't really do anything about it. 44 00:02:26,400 --> 00:02:29,280 Speaker 3: So I just want to say, for a lot of people, 45 00:02:29,360 --> 00:02:32,760 Speaker 3: just go and you know, google longevity in South Africa. 46 00:02:32,880 --> 00:02:36,079 Speaker 3: You know, go and especially if you do have access 47 00:02:36,120 --> 00:02:41,120 Speaker 3: to private healthcare. I think longevity somewhere around age eighty 48 00:02:41,160 --> 00:02:43,800 Speaker 3: eight for a lot of people. And so you've got 49 00:02:43,880 --> 00:02:46,680 Speaker 3: to make sure that you've done your planning correctly. And 50 00:02:46,840 --> 00:02:49,760 Speaker 3: as you say, it's not about year one, it's about 51 00:02:49,840 --> 00:02:52,440 Speaker 3: year twenty and twenty five of your retirement. 52 00:02:53,080 --> 00:02:56,000 Speaker 2: So when people are planning for retirement, now, what are 53 00:02:56,000 --> 00:02:59,040 Speaker 2: they planning for? What length of time are they planning for? 54 00:02:59,120 --> 00:03:01,600 Speaker 2: I mean not planning for ten years obviously, and I 55 00:03:01,600 --> 00:03:03,440 Speaker 2: think very few of us would retire and think, well, 56 00:03:03,440 --> 00:03:04,880 Speaker 2: I'm going to plan for forty. 57 00:03:06,880 --> 00:03:11,280 Speaker 3: I think the average retirement plan sort of you know, 58 00:03:11,360 --> 00:03:15,600 Speaker 3: says twenty or twenty five years of retirement, and I 59 00:03:15,600 --> 00:03:17,840 Speaker 3: think that's wrong. I think we should be planning for 60 00:03:17,880 --> 00:03:21,680 Speaker 3: at least thirty five years of retirement. And if you 61 00:03:21,760 --> 00:03:25,960 Speaker 3: consider that, you know, we might start work at twenty 62 00:03:26,120 --> 00:03:29,239 Speaker 3: or twenty three, let's say, and you might work for 63 00:03:29,280 --> 00:03:33,000 Speaker 3: thirty or thirty five years. That means you're retired life 64 00:03:33,960 --> 00:03:36,720 Speaker 3: could be as long as a working life. And the 65 00:03:36,760 --> 00:03:39,480 Speaker 3: trick around this is, you know, you only have that 66 00:03:39,520 --> 00:03:41,480 Speaker 3: working time to build up all the money you need 67 00:03:41,560 --> 00:03:44,360 Speaker 3: to look after yourself later in life. So it is 68 00:03:44,400 --> 00:03:47,520 Speaker 3: a real concern, this longevity. I mean, it's a real benefit. 69 00:03:47,560 --> 00:03:49,840 Speaker 3: I'm not in a you know, it's great that you know, 70 00:03:49,920 --> 00:03:52,440 Speaker 3: science is helping us live better and live longer, but 71 00:03:53,640 --> 00:03:56,680 Speaker 3: planning wise, we should be saying to ourselves, is there 72 00:03:56,680 --> 00:03:59,480 Speaker 3: any way I can work from you know, age sixty 73 00:03:59,520 --> 00:04:02,400 Speaker 3: five to seventy so that you know, I work that 74 00:04:02,480 --> 00:04:05,160 Speaker 3: extra time and I don't have to provide for the 75 00:04:05,240 --> 00:04:07,840 Speaker 3: income for that that sort of time. So almost it's 76 00:04:07,880 --> 00:04:10,600 Speaker 3: a double benefit. If you can work an extra five years, 77 00:04:11,040 --> 00:04:13,400 Speaker 3: it's it's five years of saving, but it's also five 78 00:04:13,440 --> 00:04:16,560 Speaker 3: years that you don't have to fund with with your savings. 79 00:04:16,760 --> 00:04:20,080 Speaker 3: So it's a real thing. I think we should we 80 00:04:20,120 --> 00:04:23,560 Speaker 3: should be working longer and planning that we were going 81 00:04:23,600 --> 00:04:26,800 Speaker 3: to you know, you know, get to the end of 82 00:04:26,800 --> 00:04:28,400 Speaker 3: life at somewhere around age one hundred. 83 00:04:28,480 --> 00:04:31,440 Speaker 2: For most of us, it's the last ten years when 84 00:04:31,440 --> 00:04:33,120 Speaker 2: you have the real problem if you haven't planned for 85 00:04:33,120 --> 00:04:35,520 Speaker 2: that last ten years. And also I suppose your costs 86 00:04:35,520 --> 00:04:36,839 Speaker 2: are going up to in some ways. 87 00:04:38,240 --> 00:04:42,520 Speaker 3: Yeah, I think you know, there's this misnoma that you know, 88 00:04:42,560 --> 00:04:45,760 Speaker 3: life gets cheaper as you get older, and you know, 89 00:04:45,960 --> 00:04:48,200 Speaker 3: and I think that's not true. I think healthcare costs 90 00:04:48,200 --> 00:04:50,960 Speaker 3: become a much bigger part of life as you you know, 91 00:04:51,000 --> 00:04:53,800 Speaker 3: as you get into your late seventies and early eighties, 92 00:04:54,520 --> 00:04:56,000 Speaker 3: and it doesn't matter if you've got a very good 93 00:04:56,040 --> 00:04:59,000 Speaker 3: medical aid, they're still going to be costs that you 94 00:04:59,080 --> 00:05:01,240 Speaker 3: are going to incur you have to pay out of pocket. 95 00:05:02,440 --> 00:05:05,520 Speaker 3: And so you know, early in your retired life you 96 00:05:05,560 --> 00:05:07,719 Speaker 3: can always make a change that can that can help 97 00:05:07,760 --> 00:05:10,039 Speaker 3: you later. In other words, you can you know, get 98 00:05:10,040 --> 00:05:12,360 Speaker 3: a part time gig, you know, doing some work, or 99 00:05:12,720 --> 00:05:15,880 Speaker 3: you can reduce your expenses and you know, make a 100 00:05:15,880 --> 00:05:19,479 Speaker 3: big impact on your retired life later. But if you 101 00:05:19,560 --> 00:05:23,600 Speaker 3: realize only you know, at age seventy eight that actually 102 00:05:23,720 --> 00:05:26,200 Speaker 3: your your money's going to run out at age eighty five, 103 00:05:26,839 --> 00:05:28,800 Speaker 3: so suddenly you don't have a lot of scope to 104 00:05:28,839 --> 00:05:31,880 Speaker 3: make changes so that last ten years, You're quite right, Stephen, 105 00:05:31,920 --> 00:05:33,599 Speaker 3: I think it's you know, if you if you haven't 106 00:05:33,640 --> 00:05:36,360 Speaker 3: got your planning right, that that last ten years becomes 107 00:05:36,360 --> 00:05:39,279 Speaker 3: a desperate situation and not many things you can do 108 00:05:39,360 --> 00:05:40,359 Speaker 3: to address the problem. 109 00:05:40,880 --> 00:05:43,800 Speaker 2: So once you've retired, say you retire at sixty five 110 00:05:43,880 --> 00:05:46,280 Speaker 2: or seventy, right, how can you make sure that your 111 00:05:46,320 --> 00:05:49,919 Speaker 2: money is working as hard in that period than it 112 00:05:50,040 --> 00:05:54,279 Speaker 2: was before because you need to draw into it. I 113 00:05:54,279 --> 00:05:57,279 Speaker 2: suppose though you also it should be at the peak 114 00:05:57,320 --> 00:05:59,440 Speaker 2: that it will ever be, so you have more money 115 00:05:59,480 --> 00:06:01,880 Speaker 2: in this, so there should be a higher return, but 116 00:06:01,960 --> 00:06:03,479 Speaker 2: you are beginning to draw down on it. 117 00:06:05,400 --> 00:06:07,960 Speaker 3: Look at you. That's a fantastic point. And that's the 118 00:06:08,000 --> 00:06:12,080 Speaker 3: one that the big sort of pension funds and retirement 119 00:06:12,080 --> 00:06:15,120 Speaker 3: fund managers don't always get around around people at the 120 00:06:15,160 --> 00:06:18,840 Speaker 3: early stage of retirement. Is if you're planning that you're 121 00:06:18,880 --> 00:06:21,880 Speaker 3: going to live off your investments for thirty five years, 122 00:06:22,240 --> 00:06:25,520 Speaker 3: that by any definition is called the very long term, 123 00:06:26,120 --> 00:06:29,040 Speaker 3: and that means you should have a very high exposure 124 00:06:29,160 --> 00:06:34,240 Speaker 3: to growth assets like shares and property companies and the like. 125 00:06:35,160 --> 00:06:37,800 Speaker 3: And a lot of the time, you know, people get 126 00:06:37,800 --> 00:06:41,839 Speaker 3: advised to hit retirement with very conservative portfolios, where they 127 00:06:41,920 --> 00:06:44,359 Speaker 3: get told, you know, you can't afford to take losses. 128 00:06:44,400 --> 00:06:46,800 Speaker 3: You know, you need to protect what you've got, And 129 00:06:47,200 --> 00:06:50,599 Speaker 3: I understand the emotion side of that, but the truth 130 00:06:50,680 --> 00:06:53,520 Speaker 3: is that the cost of living is your biggest enemy 131 00:06:54,440 --> 00:06:57,839 Speaker 3: during retirement. It's not markets going up or down. Markets 132 00:06:57,880 --> 00:06:59,400 Speaker 3: do that all the time, and they've done it for 133 00:06:59,440 --> 00:07:01,240 Speaker 3: centuries and I'm sure they'll do it for the next 134 00:07:01,279 --> 00:07:04,960 Speaker 3: few centuries. So the one reality is that your cost 135 00:07:04,960 --> 00:07:08,160 Speaker 3: of living will go up every single year. And if 136 00:07:08,200 --> 00:07:11,880 Speaker 3: you don't have enough exposure to growth assets to give 137 00:07:11,920 --> 00:07:15,040 Speaker 3: you the growth ahead of the cost of living escalations, 138 00:07:15,560 --> 00:07:17,600 Speaker 3: then you're going to find yourself in a position where 139 00:07:17,880 --> 00:07:21,120 Speaker 3: you might you might have more money in rand terms, 140 00:07:21,320 --> 00:07:23,920 Speaker 3: but the buying power of that money is absolutely eroded. 141 00:07:24,240 --> 00:07:26,200 Speaker 3: And so I think that that's the thing that people, 142 00:07:26,440 --> 00:07:29,720 Speaker 3: you know, get wrong at retirement is they think I 143 00:07:29,800 --> 00:07:35,480 Speaker 3: need to scale down my investment objectives and be conservative 144 00:07:35,480 --> 00:07:37,800 Speaker 3: and cautious with my money, and I think it's a 145 00:07:37,800 --> 00:07:40,600 Speaker 3: big mistake. I'm also not saying that this is the 146 00:07:40,640 --> 00:07:42,200 Speaker 3: time to roll the dice, as if you're in a 147 00:07:42,200 --> 00:07:45,200 Speaker 3: casino and you take ridiculous risk that you know, that's 148 00:07:45,240 --> 00:07:48,080 Speaker 3: no good either because you can't afford to recover from 149 00:07:48,200 --> 00:07:52,080 Speaker 3: you know, catastrophic glasses. But you should be responsible and 150 00:07:52,600 --> 00:07:55,960 Speaker 3: an objective with your money. And I think somewhere around 151 00:07:56,200 --> 00:07:59,880 Speaker 3: sixty five to you know, you know, seventy five percent 152 00:07:59,920 --> 00:08:02,600 Speaker 3: of your investments should be in growth assets, you know, 153 00:08:02,720 --> 00:08:05,560 Speaker 3: it certainly shouldn't be but below fifty percent, you know, 154 00:08:05,600 --> 00:08:09,360 Speaker 3: I think that's almost recklessly conservative. If there's a phrase. 155 00:08:09,040 --> 00:08:15,680 Speaker 2: Like that, lifestyle costs as you retire. Now, I mean, 156 00:08:15,720 --> 00:08:18,880 Speaker 2: I still just think of how much money children cost. 157 00:08:18,960 --> 00:08:23,160 Speaker 2: But after that you kind of think, well, actually, as 158 00:08:23,200 --> 00:08:25,760 Speaker 2: I get older, I will spend less money. I won't 159 00:08:25,760 --> 00:08:29,760 Speaker 2: be quite as expensive to myself, and therefore my lifestyle 160 00:08:29,800 --> 00:08:32,800 Speaker 2: costs will go down once I've stopped working. Does it 161 00:08:32,840 --> 00:08:33,360 Speaker 2: work like that? 162 00:08:35,120 --> 00:08:37,880 Speaker 3: I think that's almost hogwash. 163 00:08:38,160 --> 00:08:39,120 Speaker 1: In truth. 164 00:08:39,800 --> 00:08:42,480 Speaker 3: Sometimes I see financial planners talking about something called a 165 00:08:42,559 --> 00:08:45,320 Speaker 3: replacement ratio, where they'll say, you know, if you were 166 00:08:45,320 --> 00:08:49,520 Speaker 3: earning one hundred thousand, you know before retirement, you can 167 00:08:49,600 --> 00:08:52,280 Speaker 3: work on a replacement ratio of seventy five percent. In 168 00:08:52,320 --> 00:08:55,560 Speaker 3: other words, you know, instead of spending one hundred thousand, 169 00:08:55,600 --> 00:08:58,920 Speaker 3: you're now going to spend only seventy five thousand. And 170 00:08:59,880 --> 00:09:01,760 Speaker 3: I I just don't think that that's true at all. 171 00:09:02,200 --> 00:09:05,320 Speaker 3: My experience is that when people are in the very 172 00:09:05,360 --> 00:09:09,079 Speaker 3: early stages of their retirement, they are generally in very 173 00:09:09,080 --> 00:09:12,280 Speaker 3: good health. They've got time, they've got energy, and now 174 00:09:12,320 --> 00:09:14,959 Speaker 3: they've got motivation to go and do all the things 175 00:09:15,240 --> 00:09:17,320 Speaker 3: that they didn't have the time to do when they 176 00:09:17,360 --> 00:09:20,960 Speaker 3: were working. And so that means, you know, potentially you 177 00:09:21,000 --> 00:09:25,000 Speaker 3: know more travel and maybe you know more entertainment and 178 00:09:25,120 --> 00:09:27,120 Speaker 3: eating out and I think things that you couldn't get 179 00:09:27,200 --> 00:09:29,760 Speaker 3: to when you had to go to work early on 180 00:09:29,800 --> 00:09:34,120 Speaker 3: a Monday. And so in my experience, you could actually 181 00:09:34,120 --> 00:09:36,560 Speaker 3: find that you end up spending a little bit more 182 00:09:37,040 --> 00:09:39,280 Speaker 3: than you did as a working person in the first 183 00:09:39,320 --> 00:09:42,679 Speaker 3: few years of your retirement. And then the other thing 184 00:09:42,720 --> 00:09:45,120 Speaker 3: we get told is that late in life, when you're 185 00:09:45,160 --> 00:09:48,200 Speaker 3: you know, seventy eight or eighty, you're probably not traveling 186 00:09:48,320 --> 00:09:50,800 Speaker 3: very much. You know, you probably don't eat out as much, 187 00:09:50,840 --> 00:09:54,840 Speaker 3: and you're a bit more homebound. That certainly seems to 188 00:09:54,880 --> 00:09:58,320 Speaker 3: be the case. However, the medical costs that we chatted 189 00:09:58,360 --> 00:10:01,600 Speaker 3: about earlier do become a much better factor. And so 190 00:10:01,720 --> 00:10:05,800 Speaker 3: I think when we plan for retirement, we should be 191 00:10:05,880 --> 00:10:08,360 Speaker 3: saying that, you know what you were spending in the 192 00:10:08,400 --> 00:10:11,719 Speaker 3: last few years of retirement, you should maintain that as 193 00:10:11,720 --> 00:10:14,400 Speaker 3: your projection going forward. So the only thing that I 194 00:10:14,400 --> 00:10:17,720 Speaker 3: would take out of my projected lifestyle costs would be 195 00:10:17,760 --> 00:10:22,080 Speaker 3: something like university education costs for children, or perhaps you 196 00:10:22,120 --> 00:10:24,600 Speaker 3: had your last couple of bindary payments, and you know 197 00:10:24,640 --> 00:10:27,000 Speaker 3: that that's not going to repeat. But other than that, 198 00:10:27,200 --> 00:10:29,400 Speaker 3: all of the last style costs that you had before, 199 00:10:29,520 --> 00:10:32,480 Speaker 3: I would maintain them because I think you know the 200 00:10:32,520 --> 00:10:35,839 Speaker 3: mix of your costs might change. But absolutely you are 201 00:10:35,880 --> 00:10:39,440 Speaker 3: going to spend what you spent in your pre retired life. 202 00:10:39,920 --> 00:10:43,440 Speaker 2: We're talking to Warren Ingram this evening on personal finance. 203 00:10:43,440 --> 00:10:47,000 Speaker 2: The retirement lessons you can't afford to ignore. Are your 204 00:10:47,040 --> 00:10:49,720 Speaker 2: questions for Warren O double one double A three seven 205 00:10:49,880 --> 00:10:52,640 Speaker 2: two two one four for six five six seven, and 206 00:10:52,720 --> 00:10:55,719 Speaker 2: of course voice notes on seven to seven O two 207 00:10:55,880 --> 00:11:00,560 Speaker 2: one seven O two. The other thing, Warren, is that 208 00:11:01,000 --> 00:11:03,760 Speaker 2: we have a certain amount of money, and you might think, well, 209 00:11:04,240 --> 00:11:07,680 Speaker 2: over the last ten years, my investment trajectory has been 210 00:11:07,840 --> 00:11:10,160 Speaker 2: going up, and this is what I ended up with, 211 00:11:10,200 --> 00:11:13,280 Speaker 2: and if I even out inflation over the next thirty years, 212 00:11:13,280 --> 00:11:17,720 Speaker 2: it will be that. But I imagine there could also 213 00:11:17,880 --> 00:11:21,080 Speaker 2: be something that happens to those investments. And a really 214 00:11:21,160 --> 00:11:24,000 Speaker 2: good example is what's happened to the JAC since the 215 00:11:24,080 --> 00:11:26,320 Speaker 2: start of Donald Trump's Ranian adventure. 216 00:11:28,240 --> 00:11:33,360 Speaker 3: Absolutely, and the scary thing for a tired people when 217 00:11:33,400 --> 00:11:36,960 Speaker 3: you see big market moves like we've had now, is 218 00:11:37,040 --> 00:11:41,079 Speaker 3: that you're drawing money from your investments every month. And 219 00:11:41,760 --> 00:11:46,040 Speaker 3: it sounds like an obvious point, but the practice is that, 220 00:11:46,600 --> 00:11:48,760 Speaker 3: let's say you've got, just to keep a number simple, 221 00:11:48,800 --> 00:11:52,120 Speaker 3: you've got a ten million round portfolio, and every single 222 00:11:52,160 --> 00:11:54,560 Speaker 3: month you might be selling a few units of your 223 00:11:54,640 --> 00:11:59,040 Speaker 3: unit trust to fund your income. And if you're ten 224 00:11:59,080 --> 00:12:04,000 Speaker 3: million around portfolio drops by fifteen percent, then you find 225 00:12:04,000 --> 00:12:06,080 Speaker 3: yourself in a position where you've got an eight and 226 00:12:06,080 --> 00:12:09,040 Speaker 3: a half million rand portfolio, but you're still drawing the 227 00:12:09,080 --> 00:12:12,320 Speaker 3: same amount of rands every month. And so you know, 228 00:12:12,400 --> 00:12:16,720 Speaker 3: if you started your the year, let's say, drawing five percent, 229 00:12:17,000 --> 00:12:19,760 Speaker 3: you might find that halfway through the year you're now 230 00:12:19,840 --> 00:12:23,240 Speaker 3: drawing seven or eight percent. You know, if there's a 231 00:12:23,360 --> 00:12:27,160 Speaker 3: very big market drop, and the balancing act you've got 232 00:12:27,160 --> 00:12:30,080 Speaker 3: to strike here is it's good and it's part of 233 00:12:30,080 --> 00:12:33,200 Speaker 3: the plan that you are going to draw from your investments. 234 00:12:33,520 --> 00:12:37,160 Speaker 3: But now you've got this problem of drawing from investments 235 00:12:37,240 --> 00:12:40,120 Speaker 3: after they've taken a big knock and you're drawing a 236 00:12:40,120 --> 00:12:43,080 Speaker 3: bigger percentage. Just simply the mass works out like that, 237 00:12:43,559 --> 00:12:46,040 Speaker 3: and so your capital might not get the chance to 238 00:12:46,080 --> 00:12:50,320 Speaker 3: recover and so that's where we find this thing. It's 239 00:12:50,320 --> 00:12:53,040 Speaker 3: called sequence risk. It's about when you draw the money 240 00:12:53,040 --> 00:12:55,360 Speaker 3: out of your investments and at what point do you 241 00:12:55,440 --> 00:12:58,480 Speaker 3: do that. And if people don't get that planning right, 242 00:12:59,080 --> 00:13:02,120 Speaker 3: for planning for the these big market drops during their 243 00:13:02,120 --> 00:13:05,720 Speaker 3: retired lives, it can have quite a big detrimental impact 244 00:13:05,760 --> 00:13:09,320 Speaker 3: on their investments over the thirty or thirty five years 245 00:13:09,320 --> 00:13:10,240 Speaker 3: that we're talking about. 246 00:13:10,480 --> 00:13:14,000 Speaker 2: So it would make sense to plan. So you might 247 00:13:14,080 --> 00:13:16,400 Speaker 2: have I mean, and you've told us before about having 248 00:13:16,440 --> 00:13:18,720 Speaker 2: your I think it's the retirement number. In other words, 249 00:13:18,720 --> 00:13:21,720 Speaker 2: what is the number at which you feel you can retire. 250 00:13:22,160 --> 00:13:24,280 Speaker 2: You actually need to have more than that to take 251 00:13:24,280 --> 00:13:26,600 Speaker 2: into account for this. So yes, there might be an upside. 252 00:13:26,600 --> 00:13:29,680 Speaker 2: I mean, growth can surprise too, as we've seen last year, 253 00:13:30,480 --> 00:13:33,000 Speaker 2: but you actually have to prepare the other way. You 254 00:13:33,040 --> 00:13:35,480 Speaker 2: have to have more than you think you're going to need. 255 00:13:38,240 --> 00:13:40,200 Speaker 3: I mean, I think your your retirement number is probably 256 00:13:40,240 --> 00:13:43,360 Speaker 3: an accurate number. But what you what you should maybe 257 00:13:43,400 --> 00:13:45,559 Speaker 3: do is work on the mix of your assets and 258 00:13:45,960 --> 00:13:50,480 Speaker 3: just be very careful around how you mix those assets 259 00:13:50,480 --> 00:13:53,160 Speaker 3: together so that you can draw the right income from 260 00:13:53,160 --> 00:13:55,160 Speaker 3: the right assets. So just to give you a very 261 00:13:55,160 --> 00:13:58,640 Speaker 3: practical example, in the first couple of years of retirement, 262 00:13:59,320 --> 00:14:03,600 Speaker 3: maybe you you run with a slightly bigger cash balance 263 00:14:03,880 --> 00:14:06,920 Speaker 3: than is ideal, and so your emergency fund is maybe 264 00:14:07,080 --> 00:14:09,160 Speaker 3: a little bit bigger than we've been speaking about. You know, 265 00:14:09,280 --> 00:14:11,720 Speaker 3: I would always tell people take three to six months 266 00:14:11,760 --> 00:14:14,840 Speaker 3: in your emergency fund, but perhaps when you hit retirement 267 00:14:15,200 --> 00:14:18,480 Speaker 3: that you make that bigger. So you might say, actually, 268 00:14:19,560 --> 00:14:22,320 Speaker 3: let me have one year's worth of expenses in an 269 00:14:22,320 --> 00:14:27,000 Speaker 3: emergency fund, and perhaps I'll run with a little bit 270 00:14:27,040 --> 00:14:31,760 Speaker 3: more in bonds, and maybe even in my portfolio is 271 00:14:31,800 --> 00:14:34,440 Speaker 3: a little bit of extra cash. So your asset mix 272 00:14:34,480 --> 00:14:37,560 Speaker 3: looks a little bit different to the norm in that 273 00:14:37,680 --> 00:14:40,440 Speaker 3: early stage of retirement. And the reason for that is 274 00:14:40,560 --> 00:14:42,880 Speaker 3: if you do start retired life, and let's say that 275 00:14:43,040 --> 00:14:45,640 Speaker 3: was you know, January was the beginning of your retired life, 276 00:14:45,840 --> 00:14:49,000 Speaker 3: and you were feeling really good about your portfolio because 277 00:14:49,000 --> 00:14:52,360 Speaker 3: twenty twenty five was amazing, and now you see this 278 00:14:52,400 --> 00:14:55,280 Speaker 3: big drop in the jac. If you've got a big 279 00:14:55,280 --> 00:14:58,560 Speaker 3: emergency fund, you can start to use that as your 280 00:14:58,640 --> 00:15:02,120 Speaker 3: income asset for a period of time and and and 281 00:15:02,280 --> 00:15:05,040 Speaker 3: rather not draw from your growth assets, so that you 282 00:15:05,080 --> 00:15:07,200 Speaker 3: give the growth assets a bit of time to recover 283 00:15:07,360 --> 00:15:10,640 Speaker 3: because eventually this, you know what, whatever's going on with 284 00:15:10,640 --> 00:15:13,440 Speaker 3: Trump and in the Middle East, it will pass. Where 285 00:15:13,440 --> 00:15:16,480 Speaker 3: whether it passes in a week or three months, we 286 00:15:16,520 --> 00:15:19,320 Speaker 3: don't know. But but if you can have that emergency 287 00:15:19,360 --> 00:15:22,640 Speaker 3: fund to get you through this big dip, once the 288 00:15:23,080 --> 00:15:27,400 Speaker 3: markets see that this conflict is over and goods and 289 00:15:27,440 --> 00:15:30,800 Speaker 3: oil are moving again, that they're going to become optimistic 290 00:15:30,840 --> 00:15:33,000 Speaker 3: and and you know that they'll think that life is 291 00:15:33,040 --> 00:15:36,040 Speaker 3: good again, which means that investment values start to recover, 292 00:15:36,480 --> 00:15:38,720 Speaker 3: and then you can start to draw from your growth 293 00:15:38,760 --> 00:15:41,600 Speaker 3: assets again. So so I'm not sure that you have 294 00:15:41,640 --> 00:15:44,920 Speaker 3: to have a bigger or much bigger balance of retirement 295 00:15:44,960 --> 00:15:48,600 Speaker 3: assets than that retirement number we've spoken about, but I 296 00:15:48,640 --> 00:15:50,200 Speaker 3: do think you've got to be very careful with the 297 00:15:50,240 --> 00:15:51,280 Speaker 3: mix of those assets. 298 00:15:51,280 --> 00:15:54,760 Speaker 2: Even were speak to Warren Ingram tonight, the financial advisor 299 00:15:54,800 --> 00:15:57,960 Speaker 2: and co founder of Galileo Capital, your questions for him 300 00:15:57,960 --> 00:16:01,640 Speaker 2: the retirement lessons, you can't afford to ignore your thoughts 301 00:16:01,640 --> 00:16:04,120 Speaker 2: as well. Oh seven two seven oh two one seven 302 00:16:04,120 --> 00:16:05,920 Speaker 2: O two in your cause O two one four for 303 00:16:06,040 --> 00:16:08,600 Speaker 2: six five six seven and O double one double a 304 00:16:08,720 --> 00:16:11,560 Speaker 2: three oh seven oh two. We have a question from 305 00:16:11,640 --> 00:16:14,680 Speaker 2: Supia Sapias saying, I'm thirty eight. I've been sending my 306 00:16:14,760 --> 00:16:17,560 Speaker 2: parents four thousand round a month for the last six years. 307 00:16:17,760 --> 00:16:21,120 Speaker 2: They have no pension and no savings. My siblings do nothing. 308 00:16:21,360 --> 00:16:23,800 Speaker 2: I love my parents, but I'm falling behind on my 309 00:16:23,920 --> 00:16:26,440 Speaker 2: retirement savings, and I don't know how much longer I 310 00:16:26,480 --> 00:16:29,320 Speaker 2: can keep doing this. Nobody talks about this in our family. 311 00:16:29,680 --> 00:16:32,640 Speaker 2: I don't know what to do. Supia, does sound quite desperate, 312 00:16:32,680 --> 00:16:35,680 Speaker 2: Supi Ware. I'm sure you speaking actually for many many 313 00:16:35,720 --> 00:16:38,640 Speaker 2: people will have an answer for you from Warren injust a. 314 00:16:38,680 --> 00:16:42,680 Speaker 1: Month for the Money Show Personal Finance with Warren Ingram, 315 00:16:43,000 --> 00:16:45,040 Speaker 1: Warren Ingram as you know as the financial advisor and 316 00:16:45,080 --> 00:16:47,600 Speaker 1: co founder of Galileo Capital, and your questions for m 317 00:16:47,640 --> 00:16:49,840 Speaker 1: on seven two seven oh two one seven oh two. 318 00:16:50,160 --> 00:16:52,640 Speaker 2: So p Ware's question, I've been sending my parents four 319 00:16:52,680 --> 00:16:54,800 Speaker 2: thousand round a month for the last six years. I'm 320 00:16:54,840 --> 00:16:57,880 Speaker 2: thirty eight. They have no pension, no savings, my siblings 321 00:16:57,880 --> 00:17:00,360 Speaker 2: don't do anything. I love my parents, I'm falling behind 322 00:17:00,360 --> 00:17:03,320 Speaker 2: in my retirement savings. No one talks about this. I 323 00:17:03,360 --> 00:17:07,359 Speaker 2: don't know what to do. It's a very tough question, Warren. 324 00:17:07,440 --> 00:17:09,280 Speaker 2: From some Pware there and he's clearly in a very 325 00:17:09,280 --> 00:17:10,040 Speaker 2: difficult place. 326 00:17:11,440 --> 00:17:14,399 Speaker 3: Yep. And I think you made the point that there 327 00:17:14,600 --> 00:17:16,159 Speaker 3: there are a lot of people in our country in 328 00:17:16,640 --> 00:17:19,520 Speaker 3: some kind of a similar position to this, and and 329 00:17:20,080 --> 00:17:22,159 Speaker 3: I mean, it is a very difficult situation. And I 330 00:17:22,200 --> 00:17:24,919 Speaker 3: don't think there's a kind of a magic solution that 331 00:17:24,920 --> 00:17:28,560 Speaker 3: that that that deals with with all of the problems 332 00:17:28,560 --> 00:17:32,520 Speaker 3: that this raises. So my starting point here is, you know, 333 00:17:33,160 --> 00:17:35,520 Speaker 3: towards the end of the question is no one's talking 334 00:17:35,560 --> 00:17:37,840 Speaker 3: about this in the family. And and I think that 335 00:17:38,040 --> 00:17:40,720 Speaker 3: is the starting point. You know, if you're in this position, 336 00:17:41,359 --> 00:17:44,159 Speaker 3: I think it's time to sit down with your siblings 337 00:17:44,200 --> 00:17:48,040 Speaker 3: to say, we have a problem and and you know, 338 00:17:48,080 --> 00:17:50,480 Speaker 3: we need to look after our parents. And it can't 339 00:17:50,480 --> 00:17:52,760 Speaker 3: be one of us that that that carries this load. 340 00:17:53,560 --> 00:17:57,000 Speaker 3: And and so it's a case of spreading that load 341 00:17:57,160 --> 00:18:00,520 Speaker 3: in terms of thinking about this issue, discussing it, and 342 00:18:00,560 --> 00:18:03,960 Speaker 3: then jointly coming up with solutions and and and it's 343 00:18:03,960 --> 00:18:06,040 Speaker 3: not always that there's going to be, you know, a 344 00:18:06,040 --> 00:18:09,120 Speaker 3: bunch of very easy solutions to come up with. But 345 00:18:09,119 --> 00:18:11,119 Speaker 3: but it's interesting when you start to talk about this 346 00:18:11,240 --> 00:18:14,280 Speaker 3: as a collective, how people will come up with ideas 347 00:18:14,280 --> 00:18:17,879 Speaker 3: and it could be that you know that that's a 348 00:18:17,920 --> 00:18:20,920 Speaker 3: bit bit of communication, you know, helps for the rest 349 00:18:20,960 --> 00:18:23,800 Speaker 3: of the family to understand the need and that they 350 00:18:23,840 --> 00:18:26,520 Speaker 3: start to contribute. That would be the ideal, But it 351 00:18:26,560 --> 00:18:29,960 Speaker 3: could be that they find other solutions. But potentially you know, 352 00:18:30,000 --> 00:18:33,399 Speaker 3: different accommodation solutions where where where you can kind of 353 00:18:33,440 --> 00:18:36,399 Speaker 3: have a multi generation family on a property or something 354 00:18:36,480 --> 00:18:38,760 Speaker 3: like that. But but but I think it does start 355 00:18:38,880 --> 00:18:42,800 Speaker 3: with with communication. And the difficulty here is that you 356 00:18:42,840 --> 00:18:46,320 Speaker 3: can't you can't take your own nuclear family. So so 357 00:18:46,440 --> 00:18:48,959 Speaker 3: let's just say, you know that if you've got children 358 00:18:49,000 --> 00:18:52,040 Speaker 3: and and and then you know, harm your retirement funding 359 00:18:52,080 --> 00:18:54,359 Speaker 3: as well to the point where you you're in a 360 00:18:54,440 --> 00:18:57,960 Speaker 3: you know, becoming a financial burden on your children as well, 361 00:18:58,000 --> 00:19:00,680 Speaker 3: where where this problem just move from one generation to 362 00:19:00,760 --> 00:19:03,280 Speaker 3: the next. So so I think it's it's very important 363 00:19:03,320 --> 00:19:06,159 Speaker 3: that you know, if you're thirty eight years old and 364 00:19:06,440 --> 00:19:09,960 Speaker 3: you're now addressing this, you know that that you don't 365 00:19:10,000 --> 00:19:12,000 Speaker 3: just let it carry on. I think it's it's it's 366 00:19:12,000 --> 00:19:14,040 Speaker 3: correct to talk about this and and to share the 367 00:19:14,080 --> 00:19:17,239 Speaker 3: burden with everybody in the family and let everybody come 368 00:19:17,320 --> 00:19:20,280 Speaker 3: up with a solution. But but you are correct in 369 00:19:20,320 --> 00:19:22,359 Speaker 3: your in your points of view where you can't you 370 00:19:22,359 --> 00:19:25,560 Speaker 3: can't carry this load and then drive your own financial position, 371 00:19:25,720 --> 00:19:28,600 Speaker 3: you know, into a war, because then then you are 372 00:19:28,800 --> 00:19:31,200 Speaker 3: going to carry on this this legacy to your children 373 00:19:31,240 --> 00:19:34,040 Speaker 3: as well, and that's just not something any parent wants 374 00:19:34,040 --> 00:19:34,240 Speaker 3: to do. 375 00:19:34,680 --> 00:19:37,560 Speaker 2: I often think in situations like this, and I'm no 376 00:19:37,640 --> 00:19:41,399 Speaker 2: financial expert or family or psychological expert, but one of 377 00:19:41,400 --> 00:19:43,880 Speaker 2: the things that happens, we're in a neo vast experience 378 00:19:43,920 --> 00:19:46,840 Speaker 2: with money. It's tempting for Superior to say, I'm not 379 00:19:46,840 --> 00:19:48,760 Speaker 2: going to do anything. People will be angry with me 380 00:19:48,840 --> 00:19:52,280 Speaker 2: if I spring it up. If he doesn't, in the 381 00:19:52,359 --> 00:19:54,960 Speaker 2: longer run, he's going to be very angry with his 382 00:19:55,040 --> 00:19:57,640 Speaker 2: siblings and that could destroy his relationship with them too. 383 00:19:59,480 --> 00:20:01,560 Speaker 3: We we we you know, it's it's it's it's it's 384 00:20:01,640 --> 00:20:04,760 Speaker 3: it's interesting psychology here because we we do our best 385 00:20:04,880 --> 00:20:07,320 Speaker 3: to try and help everybody, and and either that means 386 00:20:07,359 --> 00:20:11,080 Speaker 3: we we rarely harm ourselves, and then that resentment builds 387 00:20:11,160 --> 00:20:13,479 Speaker 3: up later in life and or we you know, we 388 00:20:13,520 --> 00:20:16,000 Speaker 3: live with this fhear of what you know, ask ourselves 389 00:20:16,040 --> 00:20:17,720 Speaker 3: that question, what if you know? What if I bring 390 00:20:17,760 --> 00:20:20,080 Speaker 3: this up and they're upset? With me, Well, what if 391 00:20:20,520 --> 00:20:22,639 Speaker 3: you bring it up and they are relieved that they 392 00:20:22,640 --> 00:20:25,240 Speaker 3: can help. What if you bring it up and they 393 00:20:25,240 --> 00:20:28,000 Speaker 3: come up with some fantastic solutions that that you didn't 394 00:20:28,040 --> 00:20:30,280 Speaker 3: know about. And and so I think, you know, we 395 00:20:30,280 --> 00:20:33,440 Speaker 3: we shouldn't just go to the negative. And and frankly, 396 00:20:33,520 --> 00:20:35,640 Speaker 3: if your siblings are upset with you because you've been 397 00:20:35,640 --> 00:20:39,440 Speaker 3: carrying the you know, this financial burden on on their behalf, 398 00:20:39,840 --> 00:20:42,000 Speaker 3: and it's now time for them to cough up as well. 399 00:20:42,320 --> 00:20:44,399 Speaker 3: That you know, that's maybe their issue. You know, you're 400 00:20:44,720 --> 00:20:47,040 Speaker 3: living in fear of other people's feelings when you're trying 401 00:20:47,080 --> 00:20:50,240 Speaker 3: to help everybody. I'm afraid that sometimes you just got 402 00:20:50,280 --> 00:20:52,920 Speaker 3: to take the tough action and it's not being selfish, 403 00:20:53,200 --> 00:20:55,960 Speaker 3: you know, when you we might have spoken about this before, 404 00:20:55,960 --> 00:20:57,440 Speaker 3: but when you get on the airplane, you know, the 405 00:20:57,720 --> 00:21:00,320 Speaker 3: airline stewards always say to you, put the oxygen mask 406 00:21:00,400 --> 00:21:03,240 Speaker 3: on yourself before you help the passengers around you. And 407 00:21:03,560 --> 00:21:06,119 Speaker 3: this is the exact financial equivalent of doing it. You 408 00:21:06,160 --> 00:21:08,760 Speaker 3: have to look after yourself as well so that you 409 00:21:08,800 --> 00:21:10,560 Speaker 3: can be in a position to help your parents for 410 00:21:10,600 --> 00:21:13,280 Speaker 3: a very long period of time. And so don't worry 411 00:21:13,280 --> 00:21:15,919 Speaker 3: about what your siblings are going to say, you know, 412 00:21:16,040 --> 00:21:18,680 Speaker 3: I hope that actually that sharing the burden with them 413 00:21:18,960 --> 00:21:21,000 Speaker 3: allows them to help you with some solutions. 414 00:21:21,359 --> 00:21:23,520 Speaker 2: Sure, that's an interesting point. Thank you so much. Roren 415 00:21:23,600 --> 00:21:27,280 Speaker 2: Ingram's the financial advisor co founder of Galileo Capital. We've 416 00:21:27,280 --> 00:21:31,240 Speaker 2: been talking tonight about the retirement lessons you cannot afford 417 00:21:31,320 --> 00:21:34,480 Speaker 2: to ignore. This is one of those episodes of Personal 418 00:21:34,520 --> 00:21:38,159 Speaker 2: Finance where I strongly urge you to find the podcast 419 00:21:38,200 --> 00:21:41,359 Speaker 2: in about twenty minutes also and send that along to 420 00:21:41,359 --> 00:21:43,520 Speaker 2: anyone you think might actually need to hear it.